Monday, July 11, 2022 Today’s newsletter is from Brian Sozzi, Editor-in-Chief and Presenter at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. As my career continues, I have come to terms with one thing: rich, powerful people will do whatever they want well please. The reason for this is very simple – they have the money, connections and ruthless aggression to cultivate any reality they desire. This may sound cynical, but I’ve seen it time and time again. And now, everyone is seeing it firsthand with the world’s richest man, Elon Musk, walking away from his $44 billion Twitter deal late Friday. Musk is terminating the merger agreement with Twitter due to what his team believes are “material” violations of multiple provisions of the agreement. Some of those provisions appear to include Twitter’s recent decision to bar about a third of its recruiting team from providing Musk with what it considers accurate data on “bots” or fake accounts. Twitter President Brett Taylor said on Twitter that the company will take it to court to force Musk to close the deal or ask him to pay the $1 billion settlement. Taylor declined to comment to me about the unfolding series of events. On Sunday night, Bloomberg reported that Twitter has hired legal heavyweights at Lipton’s Watchell to sue Musk. A Twitter spokesperson declined to make CEO Parag Agrawal available for an interview. (A quick tip: Agrawal has been strangely quiet since the merger news broke, and it would be good for him to show some outside leadership to rally the troops as his company essentially burns down.) “This is a ‘code red’ situation for Twitter and its board, as the company will now fight Musk in a protracted legal battle to recover the deal and/or the breakup fee of at least $1 billion. We do not see any other bidders emerging at this time while the legal proceedings play out in court,” Wedbush analyst Dan Ives said in a note to clients following Friday’s news. The story continues Elon Musk arrives at the In America: Anthology of Fashion Met Gala at the Metropolitan Museum of Art in New York, New York, U.S., May 2, 2022. REUTERS/Brendan Mcdermid Ives lowered his price target on Twitter to $30, and we expect other analysts on the Street to make similar moves this week. To that end, here are eight reasons why Twitter stock is likely dead money for the foreseeable future following Musk’s iron fist at the social media platform: In one fell swoop, Musk destroyed a public company. He destroyed it because he has the money, connections and ruthless aggression to do so. The stark truth is that Musk probably doesn’t give a damn about the fact that he’s left a platform used around the world in total disrepair. It comes with the territory with people like Musk. Now, if this disaster is good news for anyone, it could be Tesla ( TSLA ) shareholders. Tesla’s stock has lost nearly 30% since Musk announced his deal to buy Twitter, and Ives believes that scrapping that deal could provide a relief rally for the stock. The looming legal battle between Musk and Twitter, however, will likely leave the Street wary of getting too fired up about either company’s prospects in the coming months, according to Ives. Happy trading…and good luck trying to come back from the abyss, Twitter.
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